Mandatory Arbitration is a Loser for the Employee

Posted on October 19, 2009 by Tom Crane

 Mandatory arbitration holds few benefits for the employee.  In the labor union context, it is helpful.  The union and employer can pick the arbitrator they want.  Both union and employer have knowledge of the different arbitrators and their particular biases.  So, both sides can make an informed selection when they choose arbitrators.  But, that does not work in the non-union context.   Because in the normal at-will situation, the employee may go to arbitration only once in his/her life.  She will have no knowledge of the different arbitrators.  Instead, the employer will go to arbitration far more often and will have more knwowledge of the different arbitrators.  

And, the cost is huge.  One typical case: the employee was required to pay half the arbitrator's fee (usually about $250/hr with a minimum of $2000/day), filing fee of $500, case filing fee of $1000, additional filing fee of $2750, $150 daily hearing fee.  These are huge fees for someone who may have ben terminated.  

Then, if you lose, you may have to pay the other side's legal fees - $207,000 in one case.  In another case, the arbitrator derived half of his annual income from the employer.  

One study found that employees won 21% of the time in mandatory arbitration while winning 56% in California state courts.  I know there are occasional significant wins for employees, but generally, employees do worse in arbitration than they do in traditional courts.  The cost alone makes it virtually impossible for any employee to pursue.  

And, since the employers do more arbitrations, the arbitratraors will favor them.  The arbitrator gets work only if they get picked by one side or the other.  Over time, the arbitrator will favor the side that hires him/her more often.  

The reliance on arbitration needs to change.  It is harming a great many employees.  Support the Arbitration Fairness Act now pending in the Senate. 

 

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Arbitrations do not Work in Non-Union Shops

Posted on June 10, 2009 by Tom Crane

 NPR has a good story on the evils of  mandatory arbitration in the workplace.  Unfortunately, it is all too accurate.  Mandatory arbitration simply does not work well in the non-union workplace.  It favors employers over employees.  Note the experience of one arbitrator who ruled against the company one time, after finding in favor of the credit card companies 19 previous times.  She was removed from the list of potential arbitrators.  

The problem with arbitration in the workplace is that arbitrators are employed or hired for a case only when both sides agree.  Both sides are presented with a list of potential arbitrators.  Both sides can strike whoever they wish.  Employers go to arbitrations multiple times.  Employers will have an institutional memory of who rules which way.  An employee will generally go to arbitration only once. The arbitrators understand this.  If they want future employment, they must find in favor of the employer.  

Support the Arbitration Fairness Act now before Congress. 

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